Scanner - National Income Accounting, Related Concept, Measurement, (2008 - 2013) Notes | Study Crash Course of Macro Economics -Class 12 - Commerce

Commerce: Scanner - National Income Accounting, Related Concept, Measurement, (2008 - 2013) Notes | Study Crash Course of Macro Economics -Class 12 - Commerce

The document Scanner - National Income Accounting, Related Concept, Measurement, (2008 - 2013) Notes | Study Crash Course of Macro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Macro Economics -Class 12.
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N.C.E.R.T QUESTION”S

(Q1) What is the difference between planned and unplanned inventory accumulation?  Write down the relation between change in inventories and value added of a firm.           Ans: Change in inventory = Value  added + I.C - Sales 

(Q2) Write down the three identities of calculating the GDP of a country by the three methods.  Also briefly explain why each of these should give us the same value of GDP.

(Q3) Suppose the GDP at market price of a country in a particular year was Rs.1,100 crores.  Net Factor Income from   Abroad was Rs.100 crores.  The value of IT  – Subsidies was Rs.150 crores and National Income was Rs.850 crores.  Calculate the aggregate value of depreciation.    
Ans: 200 cr.     

(Q4) Net National Product at Factor Cost of a particular country in a year is Rs.1,900 crores.  There are no interest payments made by the households to the firms/government, or by the firms/government to the households. The Personal  Disposable Income of the households is Rs.1,200 crores.  The personal income taxes paid by them is Rs.600 crores and  the value of retained earnings of the firms and government is valued at Rs.200 crores.  What is the value of transfer  payments made by the government and firms to the households ?  
Ans: 100 cr.  

(Q5) In a single day Raju, the barber, collects Rs.500 from haircuts; over this day, his equipment depreciates in value by Rs.50.  Of the remaining Rs.450, Raju pays sales tax worth Rs.30, takes home Rs.200 and retains Rs.220 for improvement and buying of new equipment. He further pays Rs.20 as income tax from his income.  Based on this information, complete Raju’s contribution to the following measures of income  

(a) GDP 

(b) NNP at market price 

(c) NNP at factor cost 

(d) Personal income 

(e) Personal disposable income.    
Ans: rs.500,450,420,200,180

(Q6) Write down some of the limitations of using GDP as an index of welfare of a country.

(Q7)  Give reasons for not including leisure in GNP ?

(Q8)  Which of goods - intermediate goods or final goods  are taken in estimation of national income and Why ?

(Q9) Distinguish between consumption of fixed capital and capital loss ? Why does an       enterprise make provision for depreciation ? 

(Q10) If domestic income is 200 cr and national income 190 cr . Find NFYA ?
Ans: -10

(Q11) How is income generated in Production Process ? or How the sum of net value added is equal to factor payment ?

(Q12) Explain components of Domestic factor income ?

(Q13) If person ‘A’ sells scooter to person ‘B’ through commission agent ‘C’.How these will effect N.Y ? 

C.B.S.E 2008 & Previous 
(Q1) Giving reasons, explain how the following are treated in estimating national income: (6M) 

(i) Wheat grown by a farmer but used entirely for family’s consumption.

(ii) Earnings of the shareholders from the sale of shares.

(iii) Expenditure by government on providing free education

Ans: Yes , No , Yes 

(Q2) Are the following a part of a country’s ‘net domestic product at market price’ ? Explain.

(i) Net indirect taxes 

(ii) Net exports

(iii) Net factor income from abroad

(iv) Consumption of fixed capital.

Ans: Yes , Yes , No , No

(Q3) Giving reasons explain how the following are treated while estimating national income :

(i) Payment of fees to a lawyer engaged by a firm; 

(ii) Rent free house to an employee by an employer; 

(iii) Purchases by foreign tourists.              

Ans: No , Yes ,Yes 

(Q4) Giving reasons, state whether the following are included in national income :

(i) Transport expenses by a firm.        (ii) Expenditure on construction of a house.

(iii) Gift received from employer        (iv) Purchase of a machine by a factory

(v) Salary received by an Indian resident working in US embassy in New Delhi.

(vi) Interest paid on loan taken to buy a personal car.

Ans: No, Yes, No, Yes, Yes, No 

(Q5) Will the following be a part of domestic factor income of India ? Give reasons 

(i) Old age pension given by the government. 

(ii) Factor income from abroad. 

(iii) Salaries to Indian residents working in Russian Embassy in India. 

(iv) Profits earned by a company in India, which is owned by a non-resident.

Ans: No, No , No, Yes

(Q6) Will the following be included in the national income of a country ? Give reasons

(i) School fees paid by students. 

(ii) Purchase of new shares of a domestic firm.

(iii) Gifts received from abroad. 

(iv) Furniture purchased by households.

Ans: Yes, No, No, Yes 


C.B.S.E 2009

(Q1) Give the meaning of factor income to abroad and factor income from abroad. Also give an  example of each.    

(Q2) Distinguish between domestic product and national product. When can domestic product be more than national product  ?

(Q3) While estimating national income, how will you treat the following ? 

(i) Imputed rent of self occupied houses.

(ii) Interest received on debentures.

(iii) Financial help received by flood victims
(iv) Capital gain on sale of a house

(v) Prize won in a lottery

(vi) Interest on public debt     

Ans: Yes, Yes , No, No, No , No 

(Q4) How to treat the following while estimating domestic factor income of India with  reasons 

(i) Remittances from non-resident Indians to their families in India.

(ii) Rent paid by the embassy of Japan in India to a resident Indian.

(iii) Profits earned by branches of foreign bank in India.

Ans:  No , No, Yes

(Q5) How will you treat the following while estimating national income of India ? Give reasons for your answer. (Set 2)

(i) Salaries received by Indian residents working in Russian Embassy in India.

(ii) Profits earned by an Indian bank from its branches abroad.

(iii) Entertainment tax received by the government.

Ans:  Yes , No, No

(Q6) How will you treat the following while estimating national income of India ? Give reasons for your answer. (Set 3)

(i) Salaries paid to Russians working in Indian Embassy in Russia.

(ii) Profits earned by an Indian company from its branch in Singapore.

(iii) Capital gains to Indian residents from sale of shares of a foreign company.

Ans: No , Yes, No

(Q7) From the following data, calculate “national income” by     
(a) income method and 

(b) expenditure method :                                    (Rs. in crores)

(i) Interest                        150

(ii) Rent                                                                             250

(iii) Government final consumption Expenditure       600

(iv) Private final consumption expenditure                 1200

(v) Profits                                                                           640

(vi) Compensation of employees                                    1000

(vii) Net factor income to abroad                                    30

(viii) Net indirect taxes                                                     60 

(ix) Net exports                     (-) 40

(x) Consumption of fixed capital                                     50

(xi) Net domestic capital formation                                340            
(Ans 2010 , 2010 cr)    


SAMPLE PAPER + C.B.S.E 2010

(Q1) Distinguish between real and nominal gross domestic product. (3M)

(Q2) Giving reason, classify the following into intermediate and final goods :        (3M)

(i) Machines purchased by dealer of machines.

(ii) A car purchased by a household.

Ans: Intermediate , Final

(Q3) Give the meaning of Nominal GDP and Real GDP. Which of these is the indicator of       economic welfare? (3M)

(Q4) ‘Machine’ purchased is always a final good.’ Do you agree? Give reasons for your  answer.  
Ans: No 

(Q5) How will you treat the following whil estimating national income of India ?     (6M)(i) Dividend received by a foreigner from investment in share of an Indian company.

(ii) Profits enarned by a branceh of an Indian bank in Canada.

(iii) Scholarship given to Indain students studying in India by a foreign company.

Ans: Yes , Yes ,No

(Q6) State whether the following statements are true or false. Give reasons for your answer: 

(a) Capital formation is a flow.

(b) Bread is always a consumer good.

(c) Nominal GDP can never be less than Real GDP.

(d) Gross domestic capital formation is always greater than gross fixed capital             formation. 
Ans: T , F , F , F

(Q7) Giving reasons, state whether the following statements are true or false.

(i) Real gross domestic product can be equal to nominal gross domestic product.

(ii) Savings are a stock.

(iii) Butter is only a final product. 
Ans: T , F , F 

(Q8) Explain the problem of double counting in estimating national income, with the help of an  example. Also explain two alternative ways of avoiding the problem.  (6M)

(Q9) How will you treat the following while estimating national income of India :     

(a) Dividend received by an Indian from his investment in shares of a foreign company;

(b) Money received by a family in India from relatives working abroad; 

(c) Interest received on loans given to a friend for purchasing a car.

Ans: No, No , No

(Q10) Calculate gross fixed capital formation from the following data:            (3M)

                                                                                              Rs. crores

(i) Private final consumption expenditure                       1,000

(ii) Government final consumption expenditure            500

(iii) Net exports                                                                   (-) 50

(iv) Net factor income from abroad                                  20

(v) Gross domestic product at market price                    2,500

(vi) Opening stock                                                               300

(vii) Closing stock                                                                200        
Ans: 1150 crore 

(Q11) Calculate (a) Gross domestic product at market price, and (b) Factor income form abroad from the following data :                        (Rs. in crores)    (6M)    

(i)  Profits                                                                         500

(ii)  Exports                                                                      40

(iii) Compensation of employees                                 1,500

(iv) Gross national product at factor cost                   2,800

(v) Net current transfers from rest of the world        90

(vi) Rent                                                                           300

(vii) Interest                                                                    400    

(viii) Factor income to abroad                                       120

(ix) Net indirect taxes                                                     250                    

(x)    Net domestic capital formation                           650

(xi) Gross fixed capital formation                                 700

(xii) Change in stock                                                        50        
(Ans 3050 , 120)                    

(Q12) From the following data calculate,     

(a) Gross domestic product at market price, and 

(b) Factor income to abroad :                                                                                                    

                                                                         (Rs. in crores)

(i)      Compensation of employees                 1,000

(ii)      Net exports                                            (-) 50    

(iii)    Profits                                                      400

(iv)     Interest                                                    250

(v)    Rent                                                            150

(vi)    Gross national product at factor cost   1,850

(vii)    Gross domestic capital formation        220    

(viii)    Net fixed capital formation                  150

(ix)    Change in stock                                        20

(x)    Factor income from abroad                     30

(xi)    Net indirect taxes                                     100            
( Ans 1950 , 30 )


(Q13) From the following data calculate     

(a) Gross domestic product at market price, and 

(b) Factor income from abroad :                                                                                             

                                                                                 (Rs. in crores)

(i) Gross national product at factor cost             6,150

(ii) Net exports                                                        (-) 50

(iii) Compensation of employees                            3,000                

(iv) Rent                                                                      800

(v) Interest                                                                  900

(vi) Profit                                                                    1,300

(vii) Net indirect taxes                                              300

(viii) Net domestic capital formation                      800    

(ix) Gross fixed capital formation                           850

(x) Change in stock                                                    50

(xi) Dividend                                                               300

(xii) Factor income to abroad                                   80                
( Ans 6400 cr , 130 cr )


C.B.S.E 2011    

(Q1) Define ‘depreciation’.                                    (1 mark)

(Q2) Explain how ‘non-monetary exchanges’ are a limitation in taking gross domestic product as an index of welfare.                                    (3 marks)

(Q3) Explain the treatment assigned to the following while estimating national income :  
(i) Family members working free on the farm owned by the family.

(ii) Payment of interest on borrowings by general government.    

Ans: Yes , Yes 

(Q4) Giving reasons, explain the treatment while estimating national income :      (2 each)(i) Social security contributions by employees.

(ii) Pension paid after retirement.

(iii) Expenditure on maintenance of a building.

(iv) Expenditure on adding a floor to the building.

Ans: No , Yes , No , Yes    

(Q5) Giving reasons classify the following into intermediate products and final products : 

(i) Furniture purchased by a school.

(ii) Chalks, dusters, etc. purchased by a school.

(iii) Computers installed in an office.

(iv) Mobile sets purchased by a mobile dealer.

 Ans: Final , IC , Final , Inter

C.B.S.E 2012

(Q1) Define consumption goods.                                (1 mark)

(Q2) Giving reason, explain how should the following be treated while estimating NY 

(a) Expenditure on free services provided by government

(b) Payment of interest by a government firm.\

(c) Expenditure on education of children by a family.

(d) Payment of electricity bill by a school.

 Ans: Yes , Yes , Yes , No

(Q3) Giving reason explain how should the following be treated in estimating national income:         
(a) Expenditure on fertilizers by a farmer.

(b) Purchase of tractor by a farmer.

(c) Payment of bonus by a firm.

(d) Payment of interest on a loan taken by an employee from the employer.

(e) Interest paid by banks on deposits by individuals.

(f) National debt interest.        

 Ans: No , Yes , Yes , No ,Yes,No

(Q4) Should the following be treated as final expenditure or intermediate expenditure 

(i) Purchase of furniture by a firm.

(ii) Expenditure on maintenance by a firm.

 Ans: (i) Final (ii) Intermediate.

(Q5) How will you treat the following in the calculation of Gross Domestic Product of India ? Give reasons for your answer.

(i) Profits earned by a branch of foreign bank in India.

(ii) Salaries of Indian employees working in embassy of Japan in India.

(iii) Salary of residents of Japan working in Indian embassy in Japan.

 Ans: Yes , No , Yes 

(Q6) Find Gross Value Added at Factor Cost :

(i) Units of output sold                                     2,000

(ii) Price per unit of output (Rs.)                      20

(iii) Depreciation (Rs.)                                     2,000

(iv) Change in stock (Rs.)                               (-) 500

(v) Intermediate costs (Rs.)                             15,000

(vi) Subsidy (Rs.)                                               3,000

                                             

(Q7) Find Net Value Added at Market Price :                               (3 marks) 

(i) Depreciation (Rs.)                                          700

(ii) Output sold (units)                                        900

(iii) Price per unit of output (Rs.)                      40

(iv) Closing stock (Rs.)                                        1,000

(v) Opening stock (Rs.)                                       800

(vi) Sales Tax (Rs.)                                              3000

(vii) Intermediate cost (Rs.)                              20,000

                                            

(Q8) Find out Net Value Added at Factor Cost :                        (3 marks)

(i) Price per unit of output (Rs.)                            25

(ii) Output sold (units)                                        1,000

(iii) Excise duty (Rs.)                                           5,000

(iv) Depreciation (Rs.)                                          1,000

(v) Change in stocks (Rs.)                                    (-) 500

(vi) Intermediate costs (Rs.)                                 7,000

                                                  

(Q9) Find out Net National Product at Market Price and 

                                                                               Rs. crore

   (i) Undistributed profits                                      20

    (ii) Compensation of employees                       800

    (iii) Rent                                                               300

    (iv) Dividend                                                       100

    (v) Royalty                                                            40

    (vi) Net current transfers to abroad              (-) 30

    (vii) Corporation tax                                            50

    (viii) Interest                                                        400

    (ix) Depreciation                                                  70

    (x) Net factor income from abroad                    (-) 10

    (xi) Net indirect tax                                              60

 Ans: (Q6) 27,500 , (Q7) 15500  , (Q8) 11500 , (Q9) 1760


C.B.S.E 2013

(Q1) Give two examples of intermediate goods.                        (1 M)

 Ans: 
(a) Raw material purchased for use in a factory 

(b) Machine purchased for resale etc. (any two)                 ½×2 

(Q2) Distinguish between “real” gross domestic product and “nominal” gross domestic       product. Which of these is a better index of welfare of the people and why ?        (4 M) 

Ans: When domestic product is valued at current prices it is called nominal domestic product and when it is valued at base year prices it is called real domestic product. 

 Real domestic product is a better index of welfare of the people because it indicates the change in quantity of goods  It is the value of final products produced within the domestic territory of a country during a year. 

(Q3) Calculate ‘Sales’ from the following data : (Rs. in lakhs)            (4M)    

    (i) Subsidies                                                                 200

    (ii) Opening stock                                                         100

    (iii) Closing stock                                                            600

    (iv) Intermediate consumption                                     3,000

    (v) Consumption of fixed capital                                    700

    (vi) Profit                                                                            750

    (vii) Net value added at factor cost                               2,000

                         

(Q4) Calculate ‘Sales’ from the following data :   (Rs. in lakhs)            (4M)    

    (i) Net value added at factor cost                               560

    (ii) Depreciation ock                                                       60

    (iii) Change in stock                                                      (-) 30

    (iv) Intermediate cost                                                   1,000

    (v) Export                                                                         200

    (vi) Indirect taxes                                                              60


(Q5) Calculate “Gross National Product at Market Price” from the following data :    (6 M)

                                                                                                  (Rs. in crores)

    (i) Compensation of employees                                           2,000

    (ii) Interest                                                                              500

    (iii) Rent                                                                                  700

    (iv) Profits                                                                                 800

    (v) Employer’s contribution to social security schemes     200

    (vi) Dividends                                                                           300

    (vii) Consumption of fixed capital                                        100

    (viii) Net indirect taxes                                                           250

    (ix) Net exports                                                                           70

    (x) Net factor income to abroad                                              150

    (xi) Mixed income of self-employed                                       1,500

Ans: (Q3) 5000 , (Q4) 1710 , (Q5)  5700  


(Q1) What are externalities ? Give an example of a positive externality and its impact on welfare of the people.

 Ans: Externalities refer to the benefits (or harms) a firm or an individual causes to another for which it is not paid (or penalised) (1)

Ex. : Use of public parks by the people for pleasure for which no payments are made by the public (or any other example).  It increases welfare through positive effect on health.  (2)

(Q2) What are externalities ? Give an example of a Negative externality and its impact on  welfare of the people.

Ans: same 

Example : Polluting river by an oil refinery (Or any other relevant example.)

Impact : Reduces welfare through negative effect on health 

(Q3) What are non-monetary exchanges ? Give an example . Explain the impact on use of GDP as an index of welfare of the people ?

Ans: It refers to the goods and services produced but not exchanged through money like the domestic services rendered by family memebers to each other .

These are difficult to estmate and so it escapes national income estimation .

These exchanges  however have positive effect on the welfare of the people

(Q4) How should the following be treated in estimating national income of a country, give reason 

(a) Taking care of aged parents

(b) Payment of corporate tax    

(c) Expenditure on providing police services by the government.    

 Ans: 

(a)  Should be included because it is a productive service rendered to the parents. 

(b)  should not be included because any tax payment is a transfer payment as no good or service is provided in return 

(c) should be included because expenditure on any free service provided by govt. is government’s finalconsumption expenditure. (No marks if the reason is not given)     

(Q5) Giving reasons explain how the following are treated while estimating national income :

(i) Payment of fees to a lawyer engaged by a firm; 

(ii) Rent free house to an employee by an employer; 

(iii) addition to stock during year 

(iv) Purchase of taxi by taxi driver             
 Ans: No , Yes, Yes , Yes 

(Q6) How should the following be treated in estimating national income ? Give reason :

(i) Free medical facilities to employees.

(ii) Pension to senior citizens.

(iii) Interest payment by a government owned firm.    

(iv) Exp. by a firm on payment of  fees to a chartered accountant

(v) Payment of corporate tax by firm

(vi) Purchase of regrigerator by a firm for own use 

 Ans: Yes, No , Yes , No , No ,Yes                  

(Q7) Explain the difference between final good and intermediate good. Give one example of each.    

(Q8) Find Net Value Added at Factor Cost :(Rs. in Lakh)                (3 marks)

    (i) Sales                                                                100

    (ii) Closing Stock                                                 20

    (iii) Excise                                                              15

    (iv) Opening Stock                                                 10

    (v) Depreciation                                                   12

    (vi) Intermediate Consumption                           50

   Ans: Rs. 33 Lakh

(Q9) Calculate ‘National Income’ and ‘Net National Disposable Income’ from the following :

                                                                                                  (Rs. in Arab)

    (i) Net change in stocks                                                                50

    (ii) Government final consumption expenditure                      100

    (iii) Net current transfers to abroad                                            30

    (iv) Gross domestic fixed capital formation                                200

    (v) Private final consumption expenditure                                500

    (vi) Net imports                                                                               40

    (vii) Depreciation                                                                          70

    (viii) Net factor income to abroad                                              (-) 10

    (ix) Net indirect tax                                                                      120

    (x) Net capital transfers to abroad                                                20

 Ans: 630   

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